SBS and ABC merger would be wrong, says former chairman

Dominic White, James Massola

Will tell the National Press Club that a merger between SBS and ABC would create an "unwieldy conglomerate": Former SBS chairman Joseph Skrzynski. Photo: Louie Douvis

A merger of the ABC and the SBS would be “wrong in principle, bad economics, and even worse politics”, according to Joseph Skrzynski, whose five-year term as SBS chairman ended last month.

The former investment banker will tell the National Press Club in Canberra on Tuesday that a merger, which some within the SBS fear the government could propose in the budget, would create an “unwieldy conglomerate” and make the SBS a poor second cousin.

It would also, he says, push up the cost of running the SBS by adding ABC bureaucracy and trigger a “collective conniption” at commercial broadcasters because the SBS makes a third of its revenues from advertising.

The ABC and the SBS are under scrutiny by the cabinet’s expenditure review committee, the commission of audit and an efficiency review by former Seven West Media executive Peter Lewis, which reports to Communications Minister Malcolm Turnbull this month.

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Factions within the Treasury and the ABC are thought to have raised a potential merger with the SBS as a way to generate efficiencies and save money. The SBS’ $220million operating budget is dwarfed by the ABC’s $863million.

But Mr Skrzynski will say such a team-up “should be a non-starter”, not least because SBS services 74 migrant communities and the “complex indigenous audience for NITV” which he says has very different needs in urban, rural and remote indigenous communities.

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The SBS also makes a third of its operating income from commercial revenue, mainly advertising. Mr Skrzynski, a founding partner at CHAMP Private Equity, will say: “It would be a most awkward mix, or the thin edge of the wedge, to mix SBS advertisement-supported channels with ad-free ABC.”

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Meanwhile, discord is growing in the Coalition over future funding for the ABC. Nationals MPs are calling for regional services to be firewalled from any cuts in the budget.

Nationals MPs Bruce Scott and Mark Coulton have voiced concern about possible cuts after Fairfax Media reported on Sunday that Prime Minister Tony Abbott could break a pre-election promise by cutting funding to the broadcaster.

The government’s powerful expenditure review committee is considering how to trim millions from the ABC budget, including by introducing an annual “efficiency dividend” that would force the corporation to do more with less.

Mr Abbott said on election eve there would be no cuts to the ABC or SBS, but since then the corporation, the Prime Minister and the hard right of the Liberal Party have been at loggerheads over perceived bias and misreporting.

Mr Scott said the ABC provided vital services to people in his community, including emergency services information during cyclones, floods and fires, on the whereabouts of the Royal Flying Doctor Service, as well as news and entertainment.